Bloomberg/Mumbai

Indian stocks retreated, with the benchmark index posting its longest losing run in almost four months, after the central bank cut its growth forecast and kept interest rates unchanged.

Hindalco Industries, an aluminum maker, plunged to a four-year low, leading a gauge of metal companies to its lowest level since April 2009. Reliance Industries, owner of the world’s biggest refining complex, fell for the fifth day, the longest losing streak in two months. Motorcyle maker Bajaj Auto decreased the most in more than four months.

The S&P BSE Sensex lost 1.3% to 19,348.34 at the close, set for a second monthly drop.

The Reserve Bank of India cut its economic growth forecast for the year to March 2014 to 5.5% from 5.7% and maintained the benchmark rate at 7.25%. Steadying the rupee has become a priority, the RBI said in an economic review on Monday, after the currency fell to a record on July 8. The rupee slid 1.8% yesterday.

“Given the slowdown, achieving the 5.5% forecast will be a stretch,” Shishir Bajpai, senior vice president at IIFL Wealth Management, said by phone yesterday.

The Sensex slid 2% last week as the RBI raised two rates and tightened banks’ access to cash to steady the rupee, which touched an unprecedented low of 61.2125 per dollar on July 8. The measures will be unwound in a “calibrated manner” as the rupee stabilises, the RBI said yesterday.

“There’s no scope for the RBI to roll back the tightening measures in the immediate future given the way the currency is behaving,” Rajat Jain, who oversees Rs48.5bn ($806mn) in assets as chief investment officer at Principal PNB Asset Management Co in Mumbai, said by telephone yesterday.

Hindalco slumped 4.6% to Rs86.50, the lowest level close July 2009. Sterlite Industries India, India’s biggest copper producer, lost 1.7% to Rs72.7, the lowest price in more than four years. Tata Steel tumbled 2.8% to Rs209.4, the lowest level since March 2009.

Reliance plunged 3.2% to Rs857.35, the lowest level since July 10. Bajaj Auto lost 3.5% to Rs1,925.80, the sharpest loss since March 21. Oil & Natural Gas Corp, the nation’s largest explorer, slumped 5.7% to Rs280.70, the steepest decline in more than a year.

State-owned refiners Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp plummeted by at least 8% each on concern a weakening rupee will increase their import costs, according to Alex Mathews, head of research at Geojit BNP Paribas Financial Services.

Indian Oil closed at the lowest price since March 2009 and Hindustan Petroleum at the lowest since October 2008. India relies on imported crude to meet 80% of its energy needs.

Foreigners have pulled $1.1bn from local shares this month through July 29, the most among 10 Asian markets tracked by Bloomberg, extending June’s $1.8bn sell-off. They have pared holdings of local debt by $8.9bn since May 22, when the US Federal Reserve signaled it may reduce stimulus. Fed policy makers began a two-day meeting yesterday.

“India is still hostage to what US policy will be and the market will now have to watch outside events,” Andrew Holland, chief executive officer at Ambit Investment Advisors, said by e-mail.